Benefits of Unit Link Insurance Plan
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Unit-linked
life insurance is actually an insurance product where the benefits are
expressed in terms of number of units and unit price. They can be viewed as a
combination of insurance and mutual funds. The idea here is that you put in
your money and it grows with time. So you also have life cover and money also
grows at the same time. You get units like in mutual funds, and the value of
these units grows because the company invests it for you. ULIP provides you the
option of choosing the investment option as per your risk coverage. These are
provided by the insurance companies or even banks. Unit link insurance plan or
ULIP is the advance type of insurance plan. When you pay a premium, you are
given a insurance cover and part of premium is invested in the fund of your choice.
In the initial years, a major part of the premium goes towards buying an
insurance cover and remaining portion is invested. You can also switch between
funds if the market condition or your personal circumstances changes.
The
advantage of unit-linked plans is that they are simple, clear, and easy to
understand. Being transparent the policyholder gets the entire upside on the
performance of his fund. Besides all the advantages they offer to the
customers, unit-linked plans also lead to an efficient utilisation of capital. Unit link insurance plan
is better if you want to enjoy the flexibility of investing across various
asset classes or if you want higher returns. Flexibility to choose your own
level of protection (the sum assured) & Option to choose from a wide
variety of investment fund to invest in depending on your risk profile. The
investment part of insurance is control by insurer because ULIPs offer
investors the opportunity to pick a product which matches their risk profile.
A normal
person gets confused when choosing right policy or plan that best suits for his
needs? Advisors take advantage of this buyer's ignorance and promote those
policies that fetch them the highest returns. So whenever you want to buy any
new policy or investment in to any insurance plan it is better to consult with
financial advisor. ULIP also serve the same function of providing insurance
protection against death and provision of long term savings, but they are
structured differently.
A unit-linked investment cum protection product,
with its limited period premium payment facility of 5 years, premium payment
flexibility, higher allocation of your premium for investment, unique special
additions and life insurance benefit, not only makes your money grow but also
provides your investment the special treatment that it deserves. In market
there are many insurance companies provides Unit link insurance plans but buyer
has got to decide which unit link insurance plan is better if you want to enjoy
the flexibility of investing across various asset classes or if you want higher
returns.
About the Author
Business Planner and Marketing Manager Online Employed with Bharti AXA Life, a specialist provider of unit link insurance plan.
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